CMS Proposes Increased Reimbursement for Hospitals but a Decrease for Physicians in 2025

The Centers for Medicare & Medicaid Services (CMS) released its proposed changes to the fee schedule for 2025 on July 10. Hospital compensation will increase by 2.6% from 2024 for hospital outpatient services and 2.8% for inpatient services (1). In contrast, physician payment will DECREASE 2.8% (2). This continues the trend in CMS reimbursement. Over the past 20 years, physician pay has plummeted by 26% when adjusted for inflation while hospital reimbursement has surged by 70% (3).

The proposal drew quick criticism from the American Medical Association (AMA) and the Medical Group Management Association (MGMA) (3). "With CMS estimating a fifth consecutive year of Medicare payment reductions — this time by 2.8 percent —  it's evident that Congress must solve this problem," AMA President Bruce Scott, MD, said. "In addition to the cut, CMS predicts that the Medicare Economic Index — the measure of practice cost inflation — will increase by 3.6 percent. Facing this widening gap between what Medicare pays physicians and the cost of delivering quality care to patients, physicians are urging Congress to pass a reform package that would permanently strengthen Medicare." MGMA's Senior Vice President of Government Affairs, Anders Gilberg, said the 2.8% reduction to the conversion factor would be alarming in the best circumstances, but to propose doing so at a time when 92% of medical groups report increased operating costs and are otherwise struggling to remain financially viable is critically short-sighted. Gilberg added "Medicare physician reimbursement is on a dire trajectory and these ongoing cuts continue to undermine the ability of medical practices to keep their doors open and function effectively — the need for comprehensive reform is paramount".

Over the time period of decreasing physician reimbursement, there has been a dramatic change in physician employment. Now 77% of physicians are employed, a dramatic increase from 26% only 10 years ago (5). The reason most often cited has been declining reimbursement. Although cost containment is often cited as a reason for the decline in physician payments. It should be apparent that CMS’ “cost containments” have done little to stem the rising costs of healthcare (6).  Some have associated increasing physician employment for decreasing access and quality of care (4,7).

A recent comment from George Parides asserts “what is happening now is what the government, Centers for Medicare and Medicaid Services (CMS) and all hospital systems want to happen. They want full, and I mean FULL control of all physicians …” (8). Nothing has really changed with the proposed changes in fee schedules. The trend of healthcare away from a charitable, not-for-profit 501c to a not-for-profit in name only business focused on revenue and profits continues (7). 

Richard A. Robbins MD

Editor, SWJPCC

References

1. CMS. CY 2025 Medicare Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System Proposed Rule (CMS 1809-P). July 10,2024. Available at: https://www.cms.gov/newsroom/fact-sheets/cy-2025-medicare-hospital-outpatient-prospective-payment-system-and-ambulatory-surgical-center (accessed 7/11/2024).
2. CMS. Calendar Year (CY) 2025 Medicare Physician Fee Schedule Proposed Rule. July 10, 2024. https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2025-medicare-physician-fee-schedule-proposed-rule (accessed 7/11/2024).
3. Cass A. CMS pitches 2.8% physician payment cut for 2025. Medscape. July 10, 2024. Available at: https://www.beckershospitalreview.com/finance/cms-pitches-2-8-physician-payment-cut-for-2025.html?origin=BHRE&utm_source=BHRE&utm_medium=email&utm_content=newsletter&oly_enc_id=6133H6750001J5K (accessed 7/11/24).
4. G Grossi. Dr David Eagle: CMS Reimbursement Cuts Encourage Trend of Independent Physician Exodus. American Journal of Managed Care. Feb 12, 2024. Available at: https://www.ajmc.com/view/dr-david-eagle-cms-reimbursement-cuts-encourage-trend-of-independent-physician-exodus (accessed 7/11/24).
5. Physicians Advocacy Institute. Updated Report: Hospital and Corporate Acquisition of Physician Practices and Physician Employment 2019-2023. April 2024. Available at: https://www.physiciansadvocacyinstitute.org/Portals/0/assets/docs/PAI-Research/PAI-Avalere%20Physician%20Employment%20Trends%20Study%202019-2023%20Final.pdf?ver=uGHF46u1GSeZgYXMKFyYvw%3d%3d (accessed 7/11/24).
6. McGough M, Winger A, Rakshit S, Amin K. How has U.S. spending on healthcare changed over time? Peterson-KFF Health System Tracker. December 15, 2023. Available at: https://www.healthsystemtracker.org/chart-collection/u-s-spending-healthcare-changed-time/#Total%20national%20health%20expenditures,%20US%20$%20Billions,%201970-2022 (accessed 7/11/24).
7. Robbins RA. A Call for Change in Healthcare Governance. Southwest J Pulm Crit Care Sleep. 2024;28(6):91-93. [CrossRef]
8. Parides GC. Only a Snowball’s Chance in Hell: Comment on A Call for Change in Healthcare Governance. Southwest J Pulm Crit Care Sleep. 2024;28(6):94. [CrossRef]

Cite as: Robbins RA. CMS Proposes Increased Reimbursement for Hospitals but a Decrease for Physicians in 2025. Southwest J Pulm Crit Care Sleep. 2024;29(1):8-9. doi: https://doi.org/10.13175/swjpccs033-24 PDF

MedPAC Votes to Scrap MIPS

The Medicare Payment Advisory Commission (MedPAC) voted 14 to 2 on January 11^th in favor of telling Congress to do away with Merit-based Incentive Payment System (MIPS) (1). Instead they favor moving to what the panel termed a voluntary value program (2). Lawmakers mandated MIPS as part of the bipartisan 2015 Medicare Access and CHIP Reauthorization Act (MACRA) ending the sustainable growth rate formula that had repeatedly threatened to cause deep cuts in Medicare payments to doctors.

On a slide presentation before the vote, the MedPAC staff said MIPS cannot succeed. The cited the following reasons for MIPS’ probable failure (3):

• Replicates flaws of prior value-based purchasing programs
• Burdensome and complex
• Much of the reported information is not meaningful
• Scores not comparable across clinicians
• MIPS payment adjustments will be minimal in the first two years, large and arbitrary in later years
• MIPS will not succeed in helping beneficiaries choose clinicians, helping clinicians change practice patters to improve value, or helping the Medicare program to reward clinicians based on value

Supporters of the MedPAC approach argued for fast action. It will be difficult to dismantle MIPS if it becomes entrenched, said MedPAC panelist Rita Redberg MD (1).

One of the four physician members of the committee, Alice Coombs MD, an anesthesiologist and critical care specialist, dissented. "We have not seen one specialty physician group yet say, 'You know what, I like getting rid of MIPS and I like this [Voluntary Value Program], let's go with it.' " The American Medical Association (AMA) protested the MedPAC vote arguing to keep MIPS in place (1). "Where we are is that we'd like to fix it rather than kill it," Sharon McIlrath, assistant director of federal affairs at the AMA, told the MedPAC panelists during the public comment period. The AMA separately issued a statement from its president, David O. Barbe MD (1). "The best remedy is to fix MIPS rather than jumping into another sweeping change that has not been fleshed out and would have many of the same methodological issues as MIPS," Barbe said.

It's unclear how Congress and CMS will greet the MedPAC recommendation on MIPS. Congress in recent months has struggled with healthcare legislation, for example, reauthorization of the Children's Health Insurance Program. Routine appropriations have not yet been completed for fiscal 2018, The AMA's McIlrath told MedPAC that it doesn't appear "politically viable to think that you are going to go up there and think that you are going to get the Hill to kill MIPS (1)."

Richard A. Robbins, MD

Editor, SWJPCC

References

1. Young KD. MedPAC backs bid to scrap MIPS Medicare pay system amid dissent. Medscape. January 11, 2018. Available at: https://www.medscape.com/viewarticle/891240 (accessed 1/13/18).
2. Robbins RA. CMS announces new payment model. Southwest J Pulm Crit Care. 2018;16(1):29-30. Available at: http://www.swjpcc.com/news/2018/1/11/cms-announces-new-payment-model.html (accessed 1/13/18).
3. Bloniarz K, Winter A, Glass D. Assessing payment adequacy and updating payments. Available at: http://www.medpac.gov/docs/default-source/default-document-library/jan-2018-phys-mips-public.pdf?sfvrsn=0 (accessed 1/13/18).

Cite as: Robbins RA. MedPAC votes to scrap MIPS. Southwest J Pulm Crit Care. 2018;16(1):42-3. doi: https://doi.org/10.13175/swjpcc010-18 PDF